Tobacco Facts.

Opposition Leader Malcolm Turnbull has defended his proposed cigarette tax hike amid criticism from his own party, saying it is a responsible measure in difficult times.

Mr Turnbull last night used his Budget reply speech to announce the Opposition would block moves to means test the private health insurance rebate.

Instead Mr Turnbull has proposed a 12.5 per cent rise in the tax on cigarettes as a way of making up the $2 billion in savings the rebate changes would have netted the Government.

The issue could provide the Government with the trigger for an early election, a prospect that Mr Turnbull acknowledged in last night’s speech.

Liberal backbencher Bronwyn Bishop has criticised the proposed increase but Mr Turnbull has defended his “tough” decision.

“Everyone would like to avoid tax rises,” he told AM.

“I’d like all taxes to be lower than they are. But the fact of the matter is, you have to be responsible in terms of managing the country’s finances.

“If I were to say to Mr Rudd, we’re going to oppose an item in your Budget, that if it isn’t carried will increase the deficit, without offering a viable alternative, then he could say, ‘Well how credible are you?’.”

But assistant Treasurer Chris Bowen has attacked Mr Turnbull’s economic credibility, saying his proposals will not result in a lower deficit.

“Last night he proposed the same deficit or even higher because he didn’t support all of our savings measures, he proposed some new revenue measures and all he proposed was a swap,” he told AM.

“When the time comes to put your money where your mouth is he actually proposes the same deficit or even a higher one.”

The Government has also criticised the Opposition for backing a tax on cigarettes while opposing a tax rise on pre-mixed drinks, after it sunk the Government’s alcopops legislation in March.

Mr Turnbull has signalled the Opposition may change its mind and support the law, but says you can’t compare the two.

“We will reconsider that when it comes back to us,” he said.

“But it is not an effective health measure. It’s the equivalent of for example putting a tax on on brand of cigarettes and not others.”

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